Refiners warn against Trump’s proposed fixes to RFS

Source: By Josh Siegel, Washington Examiner • Posted: Friday, August 30, 2019

The CEOs of major refiners warned President Trump on Wednesday not to move forward with proposed fixes to the Renewable Fuel Standard.

Trump is expected soon to increase federal mandates for production of corn-based ethanol and biodiesel in order to quell complaints from farmers — a key voting constituency — about the administration’s policy of exempting some small oil refineries from RFS requirements to blend billions of gallons of corn ethanol into gasoline.

“The fixes that are being suggested by the Department of Agriculture and the biofuels community that would raise the conventional biofuel mandate will do nothing to increase domestic ethanol usage, but will only give incentives for more imported biodiesel,” said CEOs Joseph Gorder of Valero, Gary Heminger of Marathon and Jeff Ramsey of Flint Hills Resources, in a letter to Trump.

The refiners argue it is “simply untrue” that ethanol demand has been undermined by EPA waivers exempting some small refineries from biofuel-blending requirements.

The three companies say they collectively produce nearly 20% of the current U.S. ethanol supply and purchase over 1 billion bushels of corn annually from farmers.

What’s the problem for farmers? The EPA announced this month that it exempted 31 oil refineries from 2018 requirements to use renewable fuel, while denying six applications, marking the first time the Trump administration has denied small refiner exemption applications under the RFS.

The exemption program aims to protect companies that find it economically untenable to meet the standard.

But corn farmers and their representatives in Congress have accused EPA of excessive use of the refinery exemptions, which they argue are eroding the market for ethanol.

Trump previews action: Trump on Thursday previewed his forthcoming proposed changes to the RFS, which are expected to keep the exemptions in place for refiners while slightly increasing biofuel-blending quotas.

“The Farmers are going to be so happy when they see what we are doing for Ethanol, not even including the E-15, year around, which is already done. It will be a giant package, get ready! At the same time I was able to save the small refineries from certain closing. Great for all!” Trump tweeted.